Chapter 12: Buying Merchandise
counterfeit merchandise
goods that are made and sold without permission of the owner of a trademark, a copyright, or a patented invention that is legally protected in the country where it is marked
for a retailer, negotiating for a longer period in which to pay for merchandise can _____.
improve the retailer's cash flow
property that is intangible and created by mental effort as opposed to physical effort is referred to as _____ property.
intellectual
building partnering relationships
(tend to go through a series of phases characterized by increasing levels of involvement) 1. awareness 2. exploration 3. expansion 4. commitment
national brands (manufacturer's brands)
a line of products designed, produced, and marketed by a vendor
green
a marketing strategy that promotes environmentally safe or beneficial products or services
chargeback
a practice used by retailers in which they deduct money from the amount they owe a vendor
umbrella (family brand)
a product's brand name associated with the company's name
cooperative (co-op) advertising
a program undertaken by a vendor in which the vendor agrees to pay all or part of a promotion for its products
copyright
a regulation that protects original works of authors, painters, sculptors, musicians, and others who product works of artistic or intellectual merit
a(n) _____ protects the original work of authors, painters, sculptors, musicians, and others who product works of artistic or intellectual merit.
copyright
tips for effective negotiating
- have at least as many negotiators as the vendor - choose a good place to negotiate - be aware of real deadlines - separate the people from the problem - insist on objective information - invent options for mutual gain - let them do the talking - know how far to go - don't burn bridges - don't assume
trust
a belief that a partner is honest (reliable, stands by its word, sincere, fulfills obligations) and benevolent (concerned about the other party's welfare)
exclusive brand
a brand developed by a national brand vendor, often in conjunction with a retailer, and sold exclusively by the retailer
copycat brands
a brand that imitates the manufacturer's brand in appearance and trade dress but generally is perceived as lower quality and is offered at a lower price
premium store brands
a branding strategy that offers the consumer a private label at a comparable manufacturer-brand quality, usually with a modest price savings
wholesale market
a concentration of vendors within a specific geographic location, perhaps even under one roof or over the internet
buybacks (stocklifts or lift-outs)
a strategy vendors and retailers use to get products into retail stores, either when a retailer allows a vendor to create a space for goods by "buying back" a competitor's inventory and removing it from a retailer's system or when the retailer forces a vendor to buy back slow-moving merchandise
tariffs (duties)
a tax placed by a government on imports
trade shows
a temporary concentration of vendors that provides retailers opportunities to place orders and view what is available in the market place
commercial bribery
a vendor's offer of money or gifts to a retailer's employee for the purpose of influencing purchasing decisions
large retailers usually have a department that is dedicated to the development of its store brands. what activities do people in these departments handle? (select all that apply) a. design and specify products b. select manufacturers to make the products c. secure manufacturing facilities d. identify trends
a. design and specify products b. select manufacturers to make the products d. identify trends
what two factors affect the price and gross margin of a merchandise category? a. margin guarantees b. slotting allowances c. exclusive dealing agreements d. tying contracts
a. margin guarantees b. slotting allowances
in negotiating, the best way to separate the people from the business issues is to _____. a. only use information that is objective b. negotiate in unfamiliar surroundings c. rely on the use of threats d. insist on receiving favors from the person
a. only use information that is objective
select from the following those items that are foundations of successful strategic relationships. a. open communication b. credible commitments c. individual goals d. mutual trust e. speculation
a. open communication b. credible commitments d. mutual trust
_____ are taxes collected by a government on imports. a. tariffs b. backsourcing c. remittances d. embargoes
a. tariffs
tying contract
an agreement between a vendor and a retailer requiring the retailer to take a products it does not necessarily desire (the tied product) to ensure that it can buy a product it does desire (the tying product)
resident buying office
an organization located in a major buying center that provides services to help retailers buy merchandise
trademark
any mark, work, picture, or design associated with a particular line of merchandise or product
reserve auctions
auction conducted by retailer buyers. known ad reverse auctions because there is one buyer and many potential sellers. in reverse auctions, retail buyers provide a specification for what they want to a group of potential vendors. the competing vendors then bid down the price at which they are willing to sell until the buyer accepts a bid
the first phase in building partnerships is _____.
awareness
select from the following the alternative names for private-label brands a. sub-brands b. own brands c. store brands d. house brands e. family brands
b. own brands c. store brands d. house brands
buybacks are also known as _____. (select all that apply) a. slotting fees b. stocklifts c. lift-outs d. chargebacks
b. stocklifts c. lift-outs
a(n) _____ market occurs when consumer goods are scarce, heavily taxed, or illegal.
black
brands that imitate the manufacturer's brand in appearance and packaging, are generally perceived as lower-quality, and are offered at lower prices, are called _____ brands.
copycat
a partner is said to be _____ if he is concerned about the other party's welfare. a. loyal b. honest c. benevolent d. skilled
c. benevolent
retailers often use a _____ when a vendor does not meet the agreed-on terms. a. markdown b. stocklift c. chargeback d. buyback
c. chargeback
using foreign suppliers to purchase private-label merchandise _____. a. increases the cost of acquisition b. lowers the level of inventory needed in stores c. increases a retailer's inventory carrying costs d. lowers the transportation costs
c. increases a retailer's inventory carrying costs
national brands are also known as _____ brands. a. private-label b. generic c. manufacturer's d. house
c. manufacturer's
select from the following the three types of store brands. a. umbrella b. generic c. premium d. copycat e. exclusive
c. premium d. copycat e. exclusive
when purchasing private-label merchandise from foreign suppliers, _____. a. retailers face shorter lead times from the suppliers b. retailers are most likely to have high inventory turnover c. retailers must maintain larger inventories in their stores d. retailers incur lower inventory carrying costs
c. retailers must maintain larger inventories in their stores
when a vendor or its agent offers or a buyer asks for "something of value" to influence purchase decisions, _____ _____ has taken place.
commercial bribery
in the _____ stage, no transactions can take place between a retailer and a vendor. a. commitment b. exploration c. expansion d. awareness
d. awareness
_____ involve spending money to improve products or services. a. common goals b. open communication beliefs c. mutual beliefs d. credible commitments
d. credible commitments
_____ merchandise is similar to gray-market merchandise except there need not be distribution across international boarders.
diverted
slotting fees (slotting allowances)
fee paid by a vendor for space in a retail store
markdown money
funds a vendor gives the retailer to cover lost gross margin dollars that result from markdowns and other merchandising issues
strategic relationship (partnering relationship)
long-term relationship in which partners make significant investments to improve both parties' profitability
at specific times during the year, wholesale centers host _____ _____ during which buyers make appointments to visit the various vendor showrooms.
market weeks
market weeks
market weeks, often located in wholesale market centers, are a specific period of time in which buyers meet with vendors in their showrooms
diverted merchandise
merchandise that is diverted from its legitimate channel of distribution; similar to gray-market goods, except there need not be distributed across international boundaries
gray-market goods (parallel imports)
merchandise that possesses a valid U.S. registered trademark and is made by a foreign manufacturer but is imported into the United States without permission of the U.S. trademark owner
gray-market goods are also known as _____ _____.
parallel imports
subbrand
part of a branding strategy in which a product's brand name is associated with the description of the product, such as Frosted Flakes, where the family brand is Kellogg's
a strategic relationship is also called a _____ relationship.
partnering
store brand (private-label brand, house brand, or own brand)
products developed and marketed by a retailer and available for sale only by that retailer
intellectual property
property that is intangible and created by intellectual (mental) effort as opposed to physical effort
fair trade
purchasing practices that require producers to pay workers a living wage, well more than the prevailing minimum wage, and offer other benefits, like onsite medical treatment
organizations located in major market centers that provide services to help retailers buy merchandise are known as _____ _____ offices.
resident buying
exclusive dealing agreement
restriction a manufacturer or wholesaler places on a retailer to carry only its products and no competing vendors' products
black market
the availability of merchandise at a high price when it is difficult or impossible to purchase under normal market circumstances; commonly involves illegal transactions
green washing (green sheen)
the disingenuous practice of marketing products or services as being environmentally friendly with the purpose of gaining public approval and sales rather than actually improving the environment
at _____ shows, vendors display their merchandise in designated areas and have sales representatives, company executives, and sometimes even celebrities available to talk with buyers as they walk through the exhibit area.
trade
fair _____ refers to a socially responsible movement that ensures that producers receive fair prices for their products.
trade
a(n) _____ _____ exists when a vendor requires that a retailer take a product it doesn't necessarily desire to ensure that it can buy a product it does desire.
tying contract
generic brands
unbranded, unadvertised merchandise found mainly in drug, grocery and discount stores
corporate social responsibility (CSR)
voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations and the concerns of its stakeholders
a(n) _____ market for retail buyers is a concentration of vendors within a specific geographic location, perhaps even under one roof or over the internet.
wholesale